The Leader Magazine

JUN 2018

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the leader June 2018 37 A nyone ever involved in creating a real estate strategy and portfolio plan has been there. You get the call by a business-unit leader that accelerated hiring is planned for an office that lacks capacity. You cross-check the headcount forecast (that you begged and bartered to get) and do not see this plan anywhere. Caught flat-footed and discouraged, you, the CRE professional, react, scheduling an emergency meeting to lease additional space, requesting additional budget to cover the cost, and warning an already-stressed project manager about a little surprise in addition to their workload! What if there was another way of avoiding a headcount crisis? One that creates an environment of increased transparency, that acknowledges we don't know what the future holds, and that encourages participation in making decisions? Challenging the traditional role of strategic planning, Red Hat CEO Jim Whitehurst recently presented his perspective, saying, "The pace of change is moving too quickly, and competitive environments are becoming more uncertain, complex, and volatile. Our ability to identify a competitively advantaged position and then execute toward that position has dramatically diminished. Companies still doing five- year plans often find them to be obsolete before they even get started." He added, "Many have tried to modify their planning processes to account for these changes. They do shorter plans, or they do scenarios or integrate portfolio thinking. And while these approaches can help, we believe companies need to adopt a fundamentally different approach." The CRE professional faces this challenge every day. We are held accountable for making long-term decisions for an uncertain future. Both the balance-sheet-bending financial stakes and the impact on talent attraction, retention and satisfaction are profound. Whereas once our go-to starting point was requesting accurate headcount forecasts that would never materialize so that we could build a rigid match of supply and demand, we have now developed a different approach. Our new approach embraces the principles of open-source software development by delivering radical transparency. We encourage participation by knowledgeable associates and allow the meritocratic "best idea wins" principle to lead decisions. The historic approach of getting a long-term workforce plan (headcount projections) and determining space requirements by mapping to this plan is a "fool's errand" and gives false comfort to those who think the future is knowable. Acknowledging that future resources will be changing to meet the volatile needs of the market brings about a different mindset, one that acknowledges problems and, instead of striving for perfection, looks to turn problems into progress. o ur approach The guiding principles of open decision-making are a part of the fabric of Red Hat and represent the basis of our approach. Instead of collecting data and proscribing an outcome, we in the Real Estate Strategy department act as catalysts who support decision- making by engaging our associates at various levels to think strategically and understand the broader context of the global real estate portfolio and the benefits, risks and impacts of decisions. Within our environment of meritocracy, we are stewards of the culture and agents of the strategy, guiding a series of concrete actions required to deliver the business requirements. t ransparency Our open approach to portfolio planning starts at the individual office scale, where we have a "site strategy" meeting to share key data about the office (KPIs, lease details, cost, risks, etc.) with the local team and have an open dialogue about how the office is meeting its needs. We have a defined and documented shared purpose, a mission statement for the office, so it is clear WHY we have invested in an office at a particular location. During the call we seek to understand all the business drivers and expected workforce changes, and have an open discussion about the conditions of the space. This often leads to a request or informs our recommendation to invest in some way; to relocate, expand or remodel the office. This is where being transparent is especially critical and we open the aperture to discuss how the office in question fits into the overall portfolio and explain that with competition for capital, any requests will need to be prioritized and all trade-offs considered. Participation At the conclusion of the site strategy meeting, we agree to collaborate as a team and encourage participation in the creation of a business case to explain the cost, benefits and risks of making the investment in the particular office. The most challenging part of this is agreeing on a set of assumptions and making a collective bet on what the future might hold. However, through open participation with a wide audience, we can be confident that we have gathered as much information as possible and are therefore better placed to make this an informed bet. In an open organization, individuals play a significant role in driving innovation and decision-making. There is power that comes from individuals actively participating and engaging in the process. The concept of a small group of high-ranking executives setting the course without buy-in through the entire organization is outdated. Instead, in an open organization we rely on people at all levels of the organization to participate and continuously try different things. With this approach, courses can be adjusted quickly if we receive feedback from teams and new directions can be explored.

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